Purpose
The BUILD IT! Loan Guaranty Program was created in 1994 to encourage
other lenders to provide interim financing when they might not otherwise
do so – for “high risk” or unconventional projects,
to unfamiliar types of borrowers or in unfamiliar geographic markets.
The program offers MFA guaranties of up to 50% of the risk of loss
in the underlying loan. MFA has successfully guarantied the loans
of both conventional lending institutions and community lenders
in the past.
Eligible Borrowers
Loans to public or tribal agencies and nonprofit developers can
be guarantied under this program.
Eligible Projects
BUILD IT! Loan guaranties can be used for owner-occupied or rental
developments or special needs facilities. Sites must be responsive
to demonstrated community needs, and zoning must be pending or completed.
Commitments for matching contributions from other public sector
entities, equal to 10% of the total development costs, must be in
place. Finally, at least 40% of the units in the development must
be affordable to households earning no more than eighty percent
of adjusted area median income.
Loan Terms
The interim loan must be committed prior to application, but the
commitment may be contingent on MFA’s guaranty. Land development
and acquisition or construction costs can be funded by the loan,
but predevelopment and permanent financing will not be guarantied.
Lines of credit are eligible. The terms of the loans cannot extend
beyond the closing of the subsequent financing or three years, whichever
is sooner. Interest rates must be at or below market, and other
loan terms are also subject to MFA approval.
Loan Guaranty Terms
MFA may charge fees of up to 5% of the guaranty amount. The amount
of the guaranty is negotiable, but may not exceed 50% of the loan
principal. The guaranty will be documented in agreements acceptable
to MFA, and recorded use restrictions will be required.
How To Apply
Applications may be submitted at any time, and normally will be processed
within 45 days of receipt.
Application forms and program rules can be obtained by calling
1-800-444-6880.
